The ESG Phenomenon: World Federation of Exchanges

Editorial Staff 13 September 2022

The ESG Phenomenon: World Federation of Exchanges

The latest developments in the ESG space.

A survey of market exchanges around the world finds that they are increasing efforts to cut their own carbon footprints, encouraging their listed firms to commit to Net-Zero pledges.

Some eight respondents (out of 54) said that they took part in 12 ESG initiatives in 2021, compared with five respondents in 2020, according to the eighth Annual Sustainability Survey  published by the World Federation of Exchanges.

Initiatives offering ESG education have rapidly gained relevance over the years. They ranked eighth in 2019 In terms of the number of exchanges pursuing them, third in 2020, and second in this survey.

The findings coincide with major asset management houses, such as Vanguard, BlackRock and State Street, also pushing into the ESG space. So much so, that BlackRock’s chief executive, Larry Fink, has become a controversial figure as a result of his regular letters to companies that his firm invests in.

Not only has the number of exchanges participating in sustainability initiatives increased but also more initiatives were implemented per exchange. The average number of initiatives per exchange increased from 7.7 to 8.4.

The WFE group is for exchanges and central clearing counterparties.

Among other details, the report showed that the number of exchanges implementing initiatives which meet all five of the WFE Sustainability Principles increased by 17 per cent to 69 per cent.

Efforts to achieve ESG were more evenly distributed across environmental (31.2 per cent), social (30.6 per cent) and governance (38.6 per cent) components, compared with 25.8 er cent, 31.3 per cent and 42.9 per cent respectively a year earlier.

While green bonds continue to be the most offered ESG product, offerings across all sustainability product categories have increased, the report said.

A total of 54 exchanges participated in this year’s survey. As in previous years, the survey questionnaire was revised to capture the latest exchange-related sustainability developments.

Lonfon-based WFE represents over 250 market infrastructure providers. Of its members, 37 per cent are in Asia-Pacific, 43 per cent in Europe, the Middle East and Africa, and 20 per cent in the Americas. 

(Editor's note: This news service recently held its inaugural Wealth For Good Awards. Details of the winners are covered in the Acclaim publication. The next edition of the awards will be launched in November this year.)

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